UPDATE 2-NTSB removes Tesla as a party in its probe of 'Autopilot' crash

WASHINGTON, April 12 (Reuters) - The National Transportation Safety Board said on Thursday it had revoked Tesla Inc's status as a party to its investigation of a fatal crash in March in which the semi-autonomous "Autopilot" driving system was in use, after Tesla flouted terms of an agreement with the agency.

The rare move means Tesla Inc may not be privy to some information obtained by investigators before it is made public, but frees the company to vigorously defend the technology.

Tesla blasted the NTSB in a new statement on Thursday, saying the company chose on Tuesday to withdraw from the agreement as a formal party before the agency revoked its status.

The NTSB did not immediately respond.

Tesla "violated the party agreement by releasing investigative information before it was vetted and confirmed by the NTSB," the safety board said.

The agency said releasing incomplete information often led "to speculation and incorrect assumptions about the probable cause of a crash, which does a disservice to the investigative process and the traveling public."

Tesla said it had "been clear in our conversations with the NTSB that theyre more concerned with press headlines than actually promoting safety" and accused the agency of violating its own rules while trying to prevent Tesla from telling all the facts.

"We dont believe this is right and we will be making an official complaint to Congress," Tesla added, saying it would make an open records request to "understand the reasoning behind their focus on the safest cars in America while they ignore the cars that are the least safe."

The NTSB has three pending probes into Tesla crashes.

Tesla's initial statement announcing its withdrawal did not disclose that the NTSB was revoking its status.

Driver Walter Huang died after a March 23 crash and vehicle fire in a Tesla Inc Model X near Mountain View, California, prompting investigations by the NTSB and the National Highway Traffic Safety Administration.

Tesla's announcement late on Wednesday in California came after the company publicly blamed the driver for the crash and made statements about the incident that drew criticism from the NTSB.

Autopilot is a semi-autonomous system that handles some driving tasks.

AUTOPILOT

NTSB Chairman Robert Sumwalt told Reuters on Tuesday the NTSB had a good working relationship with Tesla but companies must follow the rules. He and Tesla Chief Executive Elon Musk spoke on Friday and again on Wednesday when he told the company it was revoking its status.

"It is unfortunate that Tesla, by its actions, did not abide by the party agreement," Sumwalt said in a statement on Thursday.

Tesla said that "even though we won't be a formal party, we will continue to provide technical assistance to the NTSB."

Huang's family said on Wednesday it had hired law firm Minami Tamaki LLP to explore legal options, adding the firm believed the Autopilot feature probably caused his death. The firm said its preliminary review of the crash suggested Autopilot was defective.

The NTSB has not disclosed any findings.

Tesla has said Huang had activated Autopilot and it was in operation at the time of the crash. Vehicle logs from the accident showed no action was taken by Huang before the crash and that he had received warnings from the system to put his hands on the wheel, the company said.

Tesla said the Autopilot system always reminded drivers to be alert and keep their hands on the wheel.

The NTSB confirmed earlier this week it had two other pending investigations of Tesla crashes, including an August 2017 Tesla battery fire in Lake Forest, California, after an owner lost control and ran the vehicle into his garage. The investigation into that fire was first reported by Reuters on Wednesday.

The agency previously faulted Tesla in a 2016 fatal crash in Florida in which Autopilot was engaged. Sumwalt said in 2017 that "system safeguards were lacking" and "Tesla allowed the driver to use the system outside of the environment for which it was designed and the system gave far too much leeway to the driver to divert his attention." Tesla said it had made improvements in the system since the crash. (Reporting by David Shepardson; Editing by Bernadette Baum and Peter Cooney)